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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Victor Lazlo who wrote (71095)	7/31/1999 10:31:00 PM
From: Bilow	Read Replies (2) \| Respond to of 164684

Hi Victor Lazlo; I read the Motley Fools commentary on AMZN results, and noticed some oddities.. fnews.yahoo.com Second quarter revenues soared 171% to $314.4 million from $116.0 million a year ago. (They were up just 7% from the first quarter's $293.6 million.) That was reportedly in the middle of the $306 million to $325 million range projected by Wall Street analysts, though some may have been looking for an even higher number. Including $55.2 million in costs related to mergers, acquisitions, and stock-based compensation, Amazon lost $138 million in the period, or $0.86 per share. On an operating basis, the net loss amounted to $82.8 million, or $0.51 per share, in line with expectations. Just where do these analysts publish their estimates for future quarter revenues? All I can find are predictions of (earnings). The relatively modest sequential revenue uptick owes something to the fact that Amazon did not add any new product categories or "verticals" during the quarter. That's a surprise! Everybody has been supposing that the individual core businesses are expanding at 170% per year. Evidently not. If AMZN had broken out book sales, the growth in them, quarter to quarter, would have been well under 7%. How much? No one outside the company knows, but clearly the bloom is off the rose on book sales. Growth in books has presumably slowed to something under 7% annualized or 31% per year. But AMZN is spending gobs of money to purchase infrastructure to support the book business. And as it expands into other "vertical" lines of business, their infrastructure will have to expand proportionately. In other words, in order to keep the top line growth going, AMZN is going to have to blow out that cash pile at some sort of incredible rate. Amazon's goal is to increase the value of its customers by continuing to add new verticals. The metrics that matter, then, are the growing number of customers, the growing number of product categories, and the continued dedication, foremost, to customer service. By all of these measures, Amazon continues on course. Short-term losses should be a non-issue for Amazon investors. Bezos & Co. are building a business for the long, long haul. Hmmm. This seems like a change in story. It used to be that the thing to watch was the increase in revenues. But since revenues are up only 7% consecutive quarterly, we are therefore redirected to instead watch the growing number of product categories and customers. Funny thing. If the categories and customer count keeps increasing, why the big decrease in quarter to quarter growth? Looks like this nag is getting a little long in the tooth, and still no profits. Also notice that the metric, "sales per customer" isn't one of the metrics that matter. Also notice that "cost to add customer" isn't listed either. Woner why? -- Carl

To: Victor Lazlo who wrote (71095)	8/1/1999 8:32:00 PM
From: astyanax	Read Replies (1) \| Respond to of 164684

New Amazon.toast article by Forrester Research! For those with short attention spans, Forrester Research CEO George F. Colony boldly predicted, when Barnes & Noble started their online effort, that Amazon.com was to be "Amazon.toast". It is now years later and I'm wondering when this "toasting" will begin. But undettered, Colony now says that Net guru Mary Meeker was spewing "garbage" when she recently exclaimed that companies like Amazon, Yahoo, and Ebay have a nearly insuperable lead. And, of course, Colony cites the infamous "Amazon.bomb" Barron's article approvingly. New report at forrester.com I've got a limited subscription, I'm not sure if anyone can access the URL so I'll post it all below. And you can get more of their wonderful research (even if it often falls on its face) by shelling out a lot of $ for a full subscription. - - Netconductor netconductor.com === My View: Beyond Amazon From: George F. Colony, President, Forrester Quickly: It's too early to call the winners in the Internet economy. Example: Amazon. Content: I was reading a breathless article in The New Yorker recently about Mary Meeker. Mary is the financial analyst at Morgan Stanley who has taken a lot of Internet companies public over the last several years. Mary was spouting the conventional wisdom that the "land grab" on the Internet is under way, and the big grabbers like Yahoo!, AOL, Amazon, and eBay verge on domination due to their vast "land holdings." Here's how she puts it: "In some categories, it's already 'Game over.' I wouldn't want to be competing against Yahoo!. I wouldn't know how." This is garbage. In the Internet economy, we are sitting around campfires in loincloths chewing on bones -- it's very, very early in the development of this economy. Check out the Amazon case. Amazon supposedly will dominate because of five factors: 1) Its brand is well-known; 2) it is gathering the best customer information; 3) its access to capital is endless; 4) it has the best technology; and 5) its syndication tactic (selling at other sites) makes it forever ubiquitous. Here's why this thinking is wrong: 1) On-line brands are fleeting. Yes, the Amazon electronic brand has strength. But Forrester's survey of 100,000 Americans has shown that loyalty in the on-line world does not match loyalty in the physical world. New brands are always just one click away -- just ask CompuServe, Prodigy, or PointCast. And four-channel brands -- which span brick-and-mortar, mail order, phone order, and Internet commerce -- will have a reach advantage over one-channel brands like Amazon. 2) Customer information will be ubiquitous. Yes, Amazon is gathering a formidable database on its customers' preferences. Problem: In the future, information on consumers will be detailed and widely available. No single company will have a monopoly on customer behavior or attitudes. 3) Capital markets cut two ways. As evidenced in the May 31, 1999, "Amazon.bomb" article in Barron's, the capital markets aren't going to perpetually fall for Amazon's ". . . don't expect us to make money for a long time" rap. And the free-flowing equity and debt markets help and hurt. Capital is gushing into the Internet economy -- funding companies that want to cut off Amazon's head. BuyBooks.com's strategy is to forever underprice Amazon, an early harbinger of the emerging competitive forces. 4) Technology IQ is growing. When Amazon started up, the technology smarts of companies like Barnes & Noble were subterranean. But standard packages like Vignette and the spread of best practices are leveling the playing field. 5) Syndication will be challenged by new software. Amazon's strategy of selling books at other sites will be attacked by technologies like Vstores. This system enables any site to start up an on-line bookstore quickly and easily, with fulfillment coming directly from the book distributor. Why give Amazon a 10% cut when you can do it yourself? What It Means -- No. 1: It's early. Hypergrowth in the Internet economy in the United States will not begin until late 2000. The game is not over; it's just begun. No one company has built an unassailable citadel yet, despite what the eIntoxicated investment bankers might say. Land that's been "conquered" by the Yahoo!s, Amazons, and eBays can be recaptured and shared. What It Means -- No. 2: The power of multichannel plays has yet to be seen. So far, only a few small examples -- REI and Eddie Bauer, with sales via retail, mail, phone, and Internet -- have really attained traction yet. I believe that multichannel plays will have extraordinary power if companies elegantly blend and synchronize those channels. Who will be the Wal-Mart of the Net? Wal-Mart -- if it has a high technology IQ and the organizational flexibility to break down barriers between its channels. What It Means -- No. 3: Brand equals giving customers a great experience in the on-line world. That means new brands can come to the fore with blinding speed based on the use of new technology. Priceline and eToys could be left with legacy technology, while newcomers entice away their customers with more immersive, interactive experiences. The upcoming threats to Amazon give a glimmer of how hellishly competitive on-line commerce will be, complete with unfaithful consumers, new challengers, and a relentless pace of technology change. Multichannel presence will be a major advantage in this world. George P.S. I welcome your comments. Please e-mail me at gfcolony@forrester.com. If you don't want to receive My View, simply send e-mail to listserv@list.forrester.com with the following command in the body of your message: signoff myview. Thanks. To sign up for George Colony's My View, enter your e-mail address below: ===